Agrarian Change and Rural Development Knowledge Gaps & Policy - PDF document

25-2-2019 Agrarian Change and Rural Development Knowledge Gaps & Policy Challenges Ruerd Ruben & Gonne Beekman UN-DESA Expert Group Meeting ‘Eradicating Poverty to Implement the 2030 Agenda for Sustainable Development’’ Key issues Food Markets for Healthier Diets � Accesibility � Affordability Agri-food Value Chains � Inclusiveness � Value added Farming Systems � Efficiency � Sustainable/ Climate-resilient Accelerating the End of Hunger & Malnutrition 1

25-2-2019 Agrarian Policies for Food Systems Rural Development Policies & Programs Agrarian Production Systems Agri-food Value Chains Food & Nutrition Security 1. Agrarian Change Demograp hy a) Changes in Food demand & Dietary Transition Urbanization Income b) Bifurcation of the Farm Production Structure Employmen t Farm Size c) Missing Middle for Rural Support Services 4 2

25-2-2019 1a) Population Growth & Demand for Food SSA population will increase from 800 Million (2000) to 2.5 Billion (2050) in next 40 years � 20% world population, More than half of world’s population growth (2020-50) is expected to take place in Africa (+ 1.3 billion). African food market will grow with > 300% between 2010 and 2030 . 5 Urbanization & Employment World: Urban population will grow to 75% in 2050 SSA: Rapid rate of Urbanization & some emerging mega-cities (Gulf of Guinea) Urban workforce share in SSA increases from 20% (2000) to 40% (in 2030) Most urban growth from natural increase (not migration) Most employment in family farms, SME businesses & informal household enterprises 6 3

25-2-2019 Food Intake: Triple burden of malnutrition Undernutrition Stunting & Wasting Overweight Micronutrient & obesity deficiencies 7 Food prices: healthy diets are expensive Nigeria: Animal-sources food calories are up to 20 times more expensive than cereal-based calories (Heady et al, 2016 Food prices & poverty reduction, IFPRI) Ethiopia: Relative prices of leafy vegetables, legumes & nuts and animal-based foods compared to staple cereals are 30-60% higher (Bachewe et al., 2017, The rising costs of nutritious foods in 8 Ethiopia, IFPRI) 4

25-2-2019 Dietary change: shifts to energy-rich food 9 Food expenditures & shopping habits SSA Household spend 45-80% of income for food SSA Markets provide 40-70 of food supplies Processed foods represent 20-40% of food intake 5

25-2-2019 1b) Farm production structure 90% of farm in the world are smallholder owned & operated, but they hold only 25% of world’s farmland Average farm size in SSA is 1.3 ha. and in SE Asia 1.06 ha. (IFAD) Rapidly increasing role of medium-scale farms (Kenya) to 50% of farmland (Zambia) 11 Agrarian structure: rural employment 44% of SSA households are engaged in off-farm and/or non-farm employment Women are 9% less likely to work non-farm: gender gap Off-fam income may Vd Broeck & Kilic, represent up to 30-50% of Worldbank, 2018 rural household income Nonfarm income may represent 20-40% of rural household income (FAO) 12 6

25-2-2019 Contract Farming Contract farming involves mainly medium-size farmers. Most contract farming takes place for high-value activities (F&V, broilers). Income & employment effects of contracts tend to be positive. Grades & standards encourage contract farming (for exports). Giel Ton et al. (2018) Contract farming for improving smallholder 13 incomes: What can we learn ?, World Development (104): 46-64 . 1c) Missing Middle: Finance Gap Bank Accounts SSA Smallholder access to (formal) finance is less than 20% Scarce offer of appropriate loan products for small-scale farmers Growing number of bank accounts (also through mobile money) Loan providers Largest number of loans from family, friends and informal institutions (ROSCA’s) 14 7

25-2-2019 Missing Middle: Lots of Very Small SMEs SME firms dominate the SSA business landscape (90% firms < 10 workers) High (female) employment generation (20-30%); but low value added P. Quartey et al. (2017) Financing the growth of SMEs in Africa. 15 Review of Development Finance 7 (1): 18-28, Thin Midstream in Value Chains ‘ Missing Middle Food Value Chain Funnel - Many smallholder producers - Some Local traders - Aggregation - Processing - Few Retailers High concentration & low - Large number of consumers competetition in the Middle of the Value Chain 8

25-2-2019 Weak farmer organizations Only 20-40% of farmers are affiliated to farmer organizations. Farmer organizations face severe financial & management constraints 17 Source: SCOPE Insight 2. Inclusive Rural Development Three Pathways � Falling out � Stepping up � Stepping out Three strategies � Innovation � Intensification � Integration 18 Source: Barrett & Dorward 9

25-2-2019 2a) Food Systems Innovations: Agrologistics International trade to/from Sub-Sahara Africa • Trade Costs are 4 – 7 times higher • Waiting times are 13-27 times longer 19 Food Systems Innovations: cash transfers Highly effective demand-led interventions for poverty reduction through cash transfers Source: Bastagli et al. (2016) SR on Impact of cash Transfers 20 10

25-2-2019 2b) Agricultural Intensification: Productivity Land Productivity Labour productivity (1991- (1961-2013) Kg/ha 2017) VA/worker (vs GDP/capita) SSA SSA Overall stagnation in land & labour productivity � delayed agricultural transformation 21 TFP growth & Food gap (SSA) Total Factor Productivity growth Food demand compared to TFP (1961-2011) by country/regio Output growth (2000-2030) Only 14% of SSA Food demand can be met by current TFP growth � Growing Food Gap 22 11

25-2-2019 Sustainable Agricultural Intensification 163 million farms (29%) are practising some forms of sustainable intensification on 453 Mha of agricultural Number of Farms land (9% of world total). Most initiatives are deploying one (25% of farms, 37% of hectares) or two (66% of farms, 52% of hectares) SI strategies. Source: Pretty et al (2018) Global Assessment of Agricultural Systems Nature Sustainability ( 1) : 441 – 446 . 23 Area of Farmland Agricultural Intensification: Trade-offs & Risks Trade-offs Win/Win : 17% of cases Win/Lose : 23 % Lose/Win : 42 % Lose/Lose: 18 % Source: Rasmussen et al. (2018). Socio-economic outcomes 24 of intensification. Nature Sustainability (1) 275 – 282 12

25-2-2019 2c) Supply chain integration: waste & losses Larger food loss & waste in perishable products (F&V, fish, dairy, tubers) Many losses already occur at farm/field level Most waste in developed economies; large losses in developing countries PHL reduction are complex (multi-stakeholder) interventions Data source: FAO 25 Supply chains: standards & certification Certification gives positive price effects, but little (or negative) yield effects. Higher income from certified plots, but no higher full income (substitution effects) Scarce direct effects for wage labourers; some indirect effects (job security). C. Oya et al. (2018) The effectiveness of agricultural certification in developing countries, World Development 112: 282-312 26 13

25-2-2019 Supply Chain: Value added distribution Farmers’ share in total VA is usually no more than 10-15 % Higher farmers’ shares in fresh produce (eggs, apples) that need little processing Large margins in stages of processing, packaging & retail (shelf space) 27 3. Knowledge & Information Gaps � Improve availability of accurate data (i.e. urban consumption, prices, value chain losses, etc.). � Training in higher quality data collection (for DHS and LSMS). � Conduct experiments (RCTs) to generate insights in responses to incentives. � Engage into robust impact studies to assess the effects of large-scale public programs. 28 14

25-2-2019 Outlook for Rural Development Strategies 1. Focus on investment to improve labour productivity in rural areas (within & outside agriculture). 2. Ample margins for reducing losses and increasing value added generation in agri-food supply chains. 3. Reinforcing the food environment through improved agrologistics and better price transmission. 4. Incentives for internal market development towards local production for healthier food choices. Thanks for your attention Ruerd.Ruben@wur.nl RRuerd 15